Pizza chains across the country have been struggling to stay afloat over the last two years as they have faced several financial challenges threatening their existence.
A common reason given for financial distress by restaurants in recent years has been the lingering effects of the Covid-19 pandemic in 2020. Several pizza chains had financial problems that worsened during the pandemic forcing them to file for bankruptcy, including Chuck E. Cheese's parent company CEC Entertainment and California Pizza Kitchen in 2020, and pizza buffet chain CiCi's in 2021.
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More recently, pizza chain distress has been tied to the increased cost of food and labor tied to rising inflation over the last two years. Companies that might be over-leveraged with debt have also watched interest rates rise over the last couple of years, which has increased their debt service costs.
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Some companies that have found themselves in legal disputes with landlords, lenders, and other creditors will sometimes need to file bankruptcy to halt the rising costs of legal proceedings.
Next Level Pizza Inc., the parent company of the Oath Pizza chain, on Oct. 22 filed for Chapter 7 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware to liquidate its remaining company assets a year after it closed all corporate-owned locations, as it has said it can't repay its creditors in full.
All company-owned locations had closed by December 2023, but a review of Oath Pizza's website on Dec. 3 showed three remaining franchises in El Segundo, Calif.; Poulsbo, Wash.; and Wellesley, Mass.
The Boston-based debtor said it filed its petition facing several problems, including sales and profit challenges and a lawsuit between investors and a proposed buyer.
EYM Pizza, which operates Pizza Hut locations in Illinois, Indiana, Ohio, Texas, and Wisconsin, filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Eastern District of Texas on July 22 seeking to sell its assets.
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The Irving, Texas-based pizza franchisee had previously been sued by Yum Brands' (YUM) Pizza Hut after it stopped paying royalties when a forbearance period with its parent company ended.
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A previous lawsuit filed by EYM against Pizza Hut for alleged breach of fiduciary duty and other charges was dismissed.
Nick's Pizza & Pub files for Chapter 11 bankruptcy again
Crystal Lake, Ill.-based Nick's Pizza & Pub has a history of generating huge public support to keep its restaurants open for business.
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The company discovered in March 2011 that it was losing $30,000 a month, sales dropped 30% and by September 2011 the company was at risk of missing payroll payments and possibly filing bankruptcy, the Northwest Herald reported in 2012.
In desperation, the company's owner Nick Sarillo sent a plea to 16,000 people on the restaurant's email list asking them to patronize Nick's Pizza & Pub to help turn around the business. Sales reportedly doubled the following week, continued growing, and remained up 80% in the following month.
Over the next several months, sales were 5%-10% higher over pre-email levels, and along with some other budget-cutting measures, the company managed to survive and not file bankruptcy.
Business rolled along until Nick's Pizza & Pub in January 2020 was forced to file a Chapter 11 petition in the U.S. Bankruptcy Court for the Northern District of Illinois before the Covid-19 pandemic began shutting down businesses across the nation.
Nick's Pizza & Pub seeks to reorganize in Chapter 11
Nick's Pizza & Pub emerged from bankruptcy and operated for over four years before filing for Chapter 11 protection a second time on Dec. 2, 2024, to reorganize and restructure its business with plans to continue operating.
The restaurant chain, which operates two locations in Crystal Lake and Elgin, Ill., listed $100,000 to $500,000 in assets and $1 million to $10 million in liabilities in its petition.
The pizza chain opened in 1995 in the Chicago suburbs and in recent months faced typical industry challenges, including management of perishable inventory and seasonal business fluctuations, court papers said. Rising operating costs, caused by inflation, likely hampered the business as well.
The debtor indicated in its petition that funds would be available to distribute to unsecured creditors.
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